Based on the data shown in Tables, calculate each of the five ROE

components for Essential and Superhigh in 1990. Using the five components.

calculate ROE for both companies in 1990.

1986 1987 1988 1989 1990 Income Statement Summary Sales $5,652 $6,990 $7,863 $8,281 $7,406 Earnings before interest and taxes (EBIT) $ 568 $ 901 $1,037 $ 708 $ 795 Interest expense (net) (147) (188) (186) (194) (195 Income before taxes $ 421 713 $ 851 $ 514 $ 600 Income taxes (144) (286) (173) (206J (266) 37% Tax rate 34% 33% 34% 34% Net income $ 277 $ 447 $ 565 $ 341 $ 394 Preferred dividends (28) (17) (17) (17) (0 Net income to common $ 249 $ 430 $ 548 $ 324 $ 394 Common shares outstanding (millions) 196 204 204 205 201 Balance Sheet Summary Current assets $1,235 $1,491 $1,702 $1,585 $1,367 Timberland assets 649 625 621 612 615 Property, plant, and equipment 4,370 4,571 5,056 5,430 5,854 Other assets 360 555 473 472 429 Total assets $6,614 $7,242 $7,852 $8,099 $8,265 Current liabilities $1,226 $1,186 $1,206 $1,606 $1,816 Long-term debt 1,120 1,340 1,585 1,346 1,585 Deferred taxes 1,000 1,000 1,016 1,000 1,000 364 350 350 400 0 Equity-preferred Equity-common 2,904 3,366 3,695 3,747 3,864 Total liabilities and equity $6,614 $7,242 $7,852 $8,099 $8,265 1986 1987 1988 1989 1990 Income Statement Summary $1,306 $1,654 $1,799 $2,010 $1,793 Sales Earnings before interest and taxes (EBIT) $ 120 $ 230 $ 221 $ 304 $ 145 Interest expense (net) (13) (36) (0) (12) (8) Income before taxes $ 107 $ 194 $ 214 $ 292 $ 137 Income taxes (44) (75) (79) (99) (46) Tax rate 41% 39% 37% 34% 34% Net income $ 63 $ 119 $ 135 $ 193 $ 91 Composesory 8 (millions) 38 38 38 38 Balance Sheet Summary Current assets $ 487 $ 504 $ 536 $ 654 $ 509 Timberland assets 512 513 508 513 518 Property, plant, and equipment 648 681 718 827 1,037 Other assets 141 151 34 38 40 Total assets $1,788 $1,849 $1,796 $2,032 $2,104 Current liabilities $ 185 $ 176 $ 162 $ 180 $195 Long-term debt 536 493 370 530 589 Deferred taxes 123 136 127 146 153 Equity 944 1,044 1,137 1,176 1,167 Total liabilities and equity $1,788 $1,849 $1,796 $2,032 $2,104